logistics

Chapter 02:Logistics

Prepared by: Shah Ridwan chowdhury

2

Logistics Defined

The process of moving and positioning inventoryto meet customer requirements at the lowest possibletotal landed cost.

• Time and Place Positioning• Least Total Cost• Asset Minimization• Supply Chain Connectivity and Visibility

Copyright @Shah Ridwan chowdhury

3

The Logistical Value proposition


4

Logistics Value Proposition

Configure in a customer relevant way whilesimultaneously increasing quality, productivity and

operational excellence.


5

Logistics Value Proposition

Configure in a customer relevant way whilesimultaneously increasing quality, productivity and

operational excellence.

• Service Excellence – Effectiveness• Cost Minimization and Avoidance – Efficiency• Customer Value Generation – Relevancy


The elements of value proposition:

• Service benefits

a) Availability

b) Operational performance

c) Service reliability

• Cost minimization

The Logistical Value proposition


THE WORK OF LOGISTICS

It is this interrelation of functions that challenges the successful implementation of integrated logistical management. Integrated work related to these these functional areas creates the capabilities needed toachieve logistical value.

The five areas of logistical work:

• Order Processing• Inventory• Transportation• Warehousing,Materials Handling, and Packaging• Facility Network Design


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Integrative Process

Management

FacilityNetwork

OrderManagement

Inventory

WarehousingMaterial Handling

Packaging

Transportation

The work of Logistics


Order Processing

The important of accurate information to achieving superior logistical performance has historically been underappreciated. While many aspects of information are critical to logistics operations, the processing of orders is of primary importance. Failure to fully comprehend this importance resulted from not fully understanding how distortion and operational failures in order processing impact logistical operations. Current information technology is capable of handling the most demanding customer requirements. When desired, order information can be exchanged between trading partners.


InventoryA sound inventory strategy is based on a combination

of five aspects of selective deployment:

(1)core customer segmantation,

(2) product profitability,

(3) transportation integration,

(4) time-basedperformance, and

(5) Competitive performance


Transportation

From the logistical system viewpoint, three factors are fundamental to transportation performance:

(1) cost,

(2) speed,

(3) consistency.


Warehousing,Materials Handling, and Packaging

The fourth functionality of logistics – warehousing, materials handling, and packaging – also represents an integral part of a logistics operating Solution .

Finally, individual products are most efficiently handled when packaged together into shipping cartons or other unit loads


Facility Network DesignFacility network design is a primary responsibility of

logistical management, since a firm’s facility structure is used to ship products and materials to customers. Typical logistics facilities are manufacturing plants, warehouses, cross-dock operations, and retail stores


LOGISTICAL OPERATIONS

Information from and about customers flows through the enterprise in the form of sales activity, forecasts, and orders. Vital information is refined into specific manufacturing, merchandising, and purchasing actions. As products and materials are procured, a value-added inventory flow is initiated, which ultimately results in ownership transfer of finished products to

To be continued……………………………………………………


customers.Thus, the logistical process is viewed in terms of two interrelated flows: inventory and information.While internal process integration is important to success, the firm must also align and integrate across the supply chain. To be fully effective in today’s competitive environment, firms must extend their enterprise integration to incorporate customers and suppliers. This extension reflects the position of logistics in the broader perspective of supply chain management.

LOGISTICAL OPERATIONS


Logistical Integration

Customers

Enterprise

MarketDistribution

ManufacturingSupport

Procurement Suppliers

Information Flow

Inventory Flow


Inventory Flow

To support manufacturing, work-in-process inventory must be properly positioned. The cost of each component and its movement becomes part of the value-added process. For better understanding, it is useful to divide logistical operations into three areas:

(1)customer accommodation,

(2) Manufacturing support, and

(3) procurement.


Information Flow

Information flow identifies specific locations within a logistical system that have requirements. Information also integrates the three operating areas. Within individual logistics areas, different movementn requirements exist with respect to size of order, availability of inventory, and urgency. The primary objective of information flow management is to reconcile these differantials to improve overall supply chain performance. It is important to stress that information requirements parallel the actual work performed in customer accommondation, manufacturing support, and procurement.


LOGISTICAL OPERATIONSARRANGEMENT

• First, they are designed to manage inventory.

• Second, the range of logistics alternatives is limited by available technology. These two characteristisc tend to create commonly observed operating arrangements.

• Three widely utilized structures are echelon, direct, and combined.


Echelon

Echelon systems utilize warehouses to create inventory assortments and achieve consolidation economies associated with

largevolume transportation shipments.


Echeloned Structured Logistics

Supplier

IndustrialDistribution orConsolidationWarehouse

ManufacturerWholesaler or

DistributionCenter

Retailer Customer

INFORMATION FLOWS


DirectDirect distribution typically uses the expedited services

of premium transport combined with information technology to rapidly process customer orders and achieve delivery performance. This combination of capabilities, designed into the order delivery cycle, reduces time delays and overcomes geographical separation from customers.


Combined

The ideal logistical arrangement is a situation wherein the inherent benefits of echeloned and direct logistics structures are combined. Inventory strategies often position fast-moving products or materials in forward warehouses, whileother, more risky or costly items, are stocked at a central location for direct deliery to customers. The basic service commitment and order size economics determine the most desirable and economical structure to service a specific customer. To illusrate, automobile replacement parts are typically distributed to customers by utilizing a combined logistics strategy.


Combined Echeloned & Direct Delivery

Supplier

IndustrialDistribution orConsolidationWarehouse

ManufacturerWholesaler or

DistributionCenter

Retailer Customer

Support for

Direct Delivery

INFORMATION FLOWS


logistics

Documents

toachieve logistical

areas of logistical

logistics operations

logistical system viewpoint

materials handling

order information

logistics definedthe

customer relevant way